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10 Reasons Why CLM Is Driving Manufacturing’s Digital Transformation

Revolutionizing customer experiences with smart, connected products that flex over their lifecycles to customers’ requirements is the future of manufacturing

Looking for new ways to grow revenue and escape commodity-like price wars, manufacturers are aggressively pursuing new business strategies. To keep growing in 2019 and beyond, every manufacturer needs to transition away from being 100% dependent on transaction revenue and start growing new businesses. Many are turning to smart, connected products and the opportunities they provide for generating much-needed services revenue.

Digitally Transforming Their Way To Growth: How The Top 10% Do It

Based on a recent survey by Configit of 250 North American manufacturers, the following are the characteristics of manufacturers growing 10% a year or more and excelling at digitally transforming their businesses:

  • Manufacturers growing 10% a year or more are exceptionally adept at integrating analytics, Business Intelligence (BI), mobility, real-time monitoring, and PLM, ERP and CRM systems into a unified growth platform.
  • They lead all other manufacturers in their ability to use the Internet of Things (IoT) technologies to fuel current and future growth including value-added product services, product-as-a-service, revenue sharing and maintenance, repair and overhaul (MRO) as a service.
  • While their PLM, CAD, ERP, and CRM systems all operate at different cadences or speeds, they’re able to synchronize all of these systems around a single, unified product model using a Configuration Lifecycle Management (CLM) platform.
  • By managing their many product variations using a lifecycle approach, they’re able to deliver what all their customers want most: the flexibility of getting short-notice production runs done quickly for customized, configure-to-order products.

10 Reasons Why CLM Is Driving Manufacturing’s Digital Transformation

High growth manufacturers only integrate systems if they’re going to enable a new business initiative, strategy or streamline an existing one. During lunch with one of the CEOs and their team who leads the aftermarket automotive parts supplier, the subject of new business models came up along with the pricing models they’re relying on to grow. The CEO and his team said the following are the ten ways CLM is enabling their digital transformation efforts to pay off today and into the future:

  1. Their customers want the opportunity to redefine custom configurations on the fly and get short-notice production runs to test new products faster than competitors. When their ERP, MES, supply chain and CRM systems weren’t connected, it was chaos when a customer wanted a short-notice production run of even the simplest product modification. That’s when the CEO and his team decided they needed to move on to the configuration lifecycle management approach. Using product modeling they’re able to define accurate Bill of Materials (BOM), work instructions including setup while having their integrated ERP, MES and supply chain management systems schedule production runs in the timeframes their customers need. 
  2. They are reaching new levels of product quality thanks to PLM, CAD, ERP, and CRM integration, all fueled by real-time monitoring from the shop floor to the top floor. One of the most powerful catalysts that high growth manufacturers rely on is a rich, real-time data stream that provides the contextual intelligence they need. Any manufacturer who is growing 10% a year or faster excels at quickly interpreting and acting on real-time data to gain greater insights into everything from machine-level performance and health to plant-wide productivity. 
  3. CLM is enabling four new connected products pricing models many of them are piloting and moving into production. Breaking free from transaction-only business models is the goal of every manufacturer today. Those growing 10% a year or faster excel at one or more of the following: value-added product services, where subscriptions or service maintenance contracts are created for each specific products; revenue-sharing, where a percentage of the increased revenue or cost savings resulting from using a connected product or service is paid; product-as-a-service, which is a pay-as-you-go pricing model based on usage hours. 
  4. Enabling manufacturers who rely on product configuration and build-to-order for 70% or more of their revenues to scale into new businesses. High growth manufacturers in the survey who are growing 10% a year or faster have all moved beyond treating product configuration as a mix of components and moved on to a Configuration Lifecycle Management (CLM) approach. CLM has enabled them to reduce time-to-market for new products and time-to-customer with new product deliveries. 
  5. Closing the gaps between PLM, CAD, ERP, and CRM and synchronizing each system to a common cadence of order definition, production and delivery are increasing product quality and customer satisfaction. That’s because every department can now communicate using its unique lexicon yet still stay orchestrated with every step of a product’s definition. Having these systems integrated also ensures all customers’ unique product configuration options are accurately communicated to manufacturing. Closing these gaps between systems reduces quoting and ordering errors and leads to higher perfect order performance as well. 
  6. When manufacturers unify their front-end and back-end systems, key metrics about quoting, pricing and margin improvement. CLM enables manufacturers to better integrate their many CRM systems and applications to manufacturing-based systems (ERP) while also providing insights to engineering (PLM). By integrating front-end and back-end systems, it’s possible to increase every CPQ strategies’ revenue potential by taking a more integrated, agile-based approach to managing product lifecycles. 
  7. For the first time, manufacturers can attain personalization at scale without sacrificing quality. The CEO of a leading automotive aftermarket parts supplier says that his greatest challenge in 2019 will be providing greater flexibility to his customers, a few of which are leading auto manufacturers globally. “They want personalization of products – at scale – so they can quickly enter new markets and capture new revenue opportunities before competitors,“ he explained. CLM is the platform that is enabling his company to accomplish greater personalization while scaling to support more diverse and challenging customer requirements. 
  8. Solves change management challenges by providing a unified, single view of all product configuration models in a single integrated system. One CEO told me that for every dollar he spent on software, he spent another $70 on change management. Getting teams to adopt new systems is very difficult because change is often seen as a threat. When front- and back-end systems are integrated and sharing real-time data, and every person and team using them has a voice in how the system operates change management is improved. Usability is also key to change management, which is one of CLM’s strengths due to each team having an opportunity to get a 360-degree view of the entire lifecycle of a product configuration. 
  9. Real-time monitoring across CRM, PLM, CAD and ERP systems at the sales order and model level are revolutionizing manufacturing. Manufactures growing 10% or more a year are finding that real-time monitoring streamlines every phase of managing a product configuration and is providing insights into process performance many have never seen before. They’re discovering how to improve and scale product configuration with the insights gained from real-time data. 
  10. High-growth manufacturers rely on their CLM platform to deliver more insightful customer-centric metrics and KPIs than before. An integrated CLM system is capable of providing more finely-tuned customer metrics that when CRM, ERP, PLM, and CAD are all stand-alone. Legacy metrics that only track inside-the-plant performance are being replaced with ones that measure quoting, product configuration and short-notice production runs of custom configurations, which is exactly what many high growth manufacturers’ customers want.